The ability of the South African Small Medium Enterprise Development Programme to promote economic growth and employment

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Abstract

The ability of the South African Small Medium Enterprise Development
Programme to promote economic growth and employment.
The Department of Trade and Industry (DTI) offers the Small Medium
Enterprise Development Programme (SMEDP) incentive grant programme to
qualifying manufacturers in South Africa. The status of the progress of this
incentive grant programme is unknown. The DTI alluded to an impact study in
the 2004 DTI Annual Report but no further reference or publication of results
of the impact study has been made.
The objectives of the study are to investigate the following three criteria of the
SMEDP and to develop benchmarks and recommendations for future
incentive grants offered by the DTI.
• Rationale for implementation of SMEDP;
• Exploration of SMEDP merits; and
• Measure of SMEDP success.
The study is a secondary analysis design with both qualitative and
quantitative components. The qualitative component allows the researcher to
reflect on the process by which the incentive programme under investigation
came into being, whilst the quantitative component allows for comment on the
result of the process as per the markers developed in the qualitative
component of the design.
There were 152 sample cases used in the study.
The outcome measures are the output measures stated in the Medium Term
Strategic Plan which are:
• The number of jobs sustained.
v i
• The number of jobs created.
• The number of Greenfield’s projects supported.
• The fixed investment in Rand terms.
• The improvement in employment levels.
The DTI achieved certain of the stated objectives. The empirical data
analysed confirms the achievement of these objectives. There is scope for
further empirical investigation for the future development of incentive grants.
The contribution of the SMEDP to economic growth and employment growth
is evident and such government interventions should be continued.
The recommendations from the study include further investigation into the
following areas to improve the benefits provided by manufacturing incentive
programmes:
• Limit the incentive to a specified Rand value per job created;
• Volume driven turnover growth not price driven turnover growth;
• The continued inclusion of expansions in future programme; and
• Specified sector programmes i.e. textile sector.

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